The mobile industry is changing. Five years ago, it was all about ‘new’. The latest model release was marked with midnight queues outside stores, and owning the top model as soon as possible was the ultimate goal. But, in 2022, attitudes have shifted, says Matt Kennedy, Chief Commerce Officer at giffgaff.
New isn’t king anymore. In a recent study commissioned by giffgaff in March 2022 to find out the UK’s view on the cost of living, almost half (46%) of the UK say they will stop or reduce spending on upgrading their mobile phones in 2022.1 On top of this, our own data shows we’ve experienced double digit year-on-year growth in refurbished phone sales between the 2019/20 period, and 2020/21.
Let’s call double digit growth what it is – a booming market. Markets don’t boom in isolation, and it’s important we’re able to capitalise on these changing consumer trends, especially when they have an underlying social good. To do that, we need to understand the driving forces behind this move to more sustainable decisions.
A customer demand for better value
It seems like a given, but you have to listen to what is actually going on outside your company walls to understand what consumers really want. Back in 2020, research suggested up to 60% of the UK would buy a refurbished phone when their current one needed replacing. That’s more than half of the UK saying this, so you have to explore why people want the option between refurbished and new now.
As the research above suggests, price is a key factor for purchasing refurbished. If purchased from a reputable refurbished expert, you’re getting a high quality, fully checked product for a fraction of the price – it’s a no brainer really. But there are positive environmental impacts that come with purchasing refurbished. It would be incorrect to say that environmental issues are something that consumers have only recently started paying attention to in recent years, but there has been a growing awareness of the impact of e-waste on our resources.
A recent KPMG report concluded that e-waste was the second biggest factor contributing to the telco industry’s overall footprint – that includes phones. Outlined into key sections, the report makes three clear recommendations on how the industry can improve. Firstly, by looking at the supply chain, including sourcing sustainable materials and recycling mobile phones. Secondly, operational costs such as electronic bills and data storage, and finally, products and services, including device repair.
Consumers have shown a clear move towards refurbished devices, At giffgaff, Black Friday 2021 saw a 77% year-on-year increase in refurbished phone sales. The whole industry should take advantage of this to put forward the environmental case too. If we want the refurbished phone market to continue to grow and prosper, we should demonstrate both the cost and sustainability benefits.
Lessons from the leaders
As part of our commitment to people, planet and profit, giffgaff has focused on refurbished devices since 2016. However, there is now an increased focus in the wider industry from others to sell refurbished phones.
From a strictly business point of view, most telco companies make their money from contracts, not selling devices. As a result, selling refurbished phones wasn’t a significant priority a few years ago. But looking beyond the hard-headed business case has led to the market growth in this area, and huge opportunity to deliver products people love.
Sometimes you need to create the space for people to come to it, and a key thing in creating this space has been tackling perceptions of quality.
A few years back, ‘refurbished’ would have invoked a vision of scuffed edges, broken screens, dead batteries – an altogether lower standard product. Today, the quality of the product has come a long way, and so has the perception.
This journey wasn’t easy. Devices didn’t increase in quality overnight and public perception didn’t flip in a heartbeat. These changes are down to a commitment from those leading the sustainable telecom industry. Back in 2016, we came to the conclusion at giffgaff that we needed to care about refurbished phones, because our members cared. So, despite the often-deceptive quality of existing offerings in this space at the time, we set out to make ourselves a destination for quality, trustworthy refurbished devices.
This meant we needed to create growth in the market powered by four factors:
- Our reputation as a brand
- Our commitment to value
- The quality of the product
- And a high standard of performance – including a 12-month guarantee and minimum battery life
We needed to change perceptions outside of our member base, so the refurbished experience had to be as important to us as it is with new devices.
Changing these perceptions is half the battle. The other half is building the case for refurbished phones so they’re seen as a standard, viable option. We’ve laid the foundations for this through our marketing campaigns too. In previous years we’ve used Black Friday – typically associated with buying new – to develop creative campaigns to encourage people to choose refurbished over new and check their drawers for old devices to recycle, highlighting the benefits of recycling and refurbishing.
Through our commitment to providing a quality product, to investing in creative campaigns that play into the cultural relevance and environmental impact of choosing refurbished, we’ve been able to see a real tangible shift when it comes to members coming to buy a device from us. New will always be the preferred option for some, but we predict that this shift to refurbished will only get greater.
Increasing demand in the future
The refurbished phone market is booming, and for those who want to see a sustainable, environmentally conscious telco industry, we’re getting there.
Going forward, cleaning up the supply chain and maintaining demand for refurbished will take a few important steps. Firstly, ensuring tech accessed in the supply chain is as ethical and environmentally friendly as possible. Secondly, ensuring adequate recycling services are provided, and finally, industry-wide support for refurbished phone sales as a key focus.
These things need support from the telco industry. The case for refurbished phones is out there, but it needs determination and commitment from the industry to become a universal reality.
If we do these three things, we won’t just be following the demands of our customers for a more sustainable industry, but ensuring the market continues to boom.
1. Censuswide online survey commissioned by giffgaff conducted 11.03.2022 to 16.03.2022 among 5,002 UK general consumers. The research was conducted to find out the population’s views on the cost of living.